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FORMS OF TRIAL BALANCE

CONTENT:

Reasons for Preparing (i) Trading Account (ii) Profit and Loss Account (iii) Balance Sheet.
Sample of Trial Balance, Trading, Profit and loss Account and Balance sheet.

Trading Account

Trading account is a final account prepared to determine gross profit or loss by a business. It is prepared at the end of each financial year.

The profit and loss account is an account prepared to determine the real profit or loss, otherwise known as the net profit or loss.

A Balance Sheet is a statement that shows the financial summary of a business. It shows the net worth of a business.

The following must be taken into consideration when preparing a trading account.

Opening Stock:- The value of items or goods in the store at the beginning of an accounting period.

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